Carry-back is the rule that lets you take the income tax relief on an SEIS or EIS investment and apply it to the tax year before the one in which the shares were issued - as though you'd written the cheque twelve months earlier. The relief itself doesn't change. A £20,000 SEIS investment still earns 50% relief; carry-back just decides which year's tax bill that relief comes off.
It sounds like an accounting footnote. In practice it's one of the more useful levers an angel has, and one of the more commonly fumbled. The April rounds close, the SEIS3 lands in the summer, and suddenly there's a question of which year the relief should hit - the one just gone, or the one you're in.
What is SEIS and EIS carry-back?
Both schemes let you treat all or part of a subscription for shares as having been made in the previous tax year. The income tax relief - 50% under SEIS, 30% under EIS - is then set against your liability for that earlier year rather than the current one. HMRC's own guidance spells out the mechanism for each scheme; see the Seed Enterprise Investment Scheme and Enterprise Investment Scheme pages on gov.uk.
The reach is strictly one year. You can carry relief back to the tax year immediately before the shares were issued, and no further. There's no two-year option, no rolling pool of unused allowance to draw down. If you invested in, say, June 2026, the choice is between the 2026/27 year you're in and the 2025/26 year that's just closed.
The relief doesn't change. Carry-back only decides which year's bill it lands against.
Why would you carry relief back a year?
Two reasons come up again and again. The first is a mismatch between when you owed tax and when you invested. If last year was a strong one - a bonus, a business exit, a chunky dividend - and this year is quieter, the relief is worth more set against the heavier bill. SEIS relief of 50% on £100,000 wipes out £50,000 of income tax. That only helps if there's £50,000 of tax there to wipe.
The second is the annual cap. SEIS relief is limited to £200,000 of investment per tax year; EIS to £1,000,000 (or £2,000,000 where at least £1,000,000 goes into knowledge-intensive companies - the research-heavy firms with longer runways). If you've already used your allowance for the current year, carry-back lets you park a fresh investment against the previous year's unused headroom instead of losing the relief altogether.
Worth saying plainly: this is about the shape of your tax position, not about whether any given company is a good place to put money. We don't do the latter. Carry-back is a timing tool, and timing is the only thing it changes.
Which limits apply to the year you carry into?
This is the detail people miss. When you carry an investment back, it counts against the annual investment limit of the earlier year - the one you're carrying into - not the year the shares were actually issued. So you can't use carry-back to stack two full years' worth of relief into one tax year. Each year has its own ceiling, and carry-back simply moves an investment from one side of 5 April to the other.
The ceilings, as they stand:
- SEIS: income tax relief at 50% on up to £200,000 of investment per tax year. Shares must be held for at least three years for the relief to stick.
- EIS: income tax relief at 30% on up to £1,000,000 per tax year, rising to £2,000,000 if at least £1,000,000 of it goes to knowledge-intensive companies. Same three-year minimum holding period.
A worked example. You invest £150,000 under EIS in May 2026, and you'd already used £900,000 of your 2026/27 allowance earlier in the year. Carrying the £150,000 back to 2025/26 - assuming you had room and a tax bill there - lets you claim 30% relief against the earlier year rather than wasting most of it against an allowance you'd nearly exhausted. Set against the wrong year, a chunk of that relief simply evaporates.
The company on the other side of the deal has its own qualifying tests - trading age, employee count, gross assets, and how much it can raise across the venture capital schemes. Those sit with the company, not with you, and the EIS company-side caps were adjusted in April 2026; the current figures are on the gov.uk EIS guidance for companies. Carry-back doesn't touch any of that. It's a feature of your personal relief, and it applies the same way whether the shares are SEIS or EIS.
The paperwork and the timing trap
Here's where carry-back quietly catches people out. You can't claim relief - this year or last - until the company has issued your SEIS3 or EIS3 certificate, the document that confirms HMRC has authorised the relief. Those certificates routinely arrive months after the money has gone in, because the company first has to trade for a period and then file with HMRC.
If the previous year's tax return is already filed by the time the certificate lands, you don't lose the relief - but the claim shifts from a tidy entry on a live return to an amendment of one already submitted (within the normal amendment window), or, later still, a written overpayment relief claim to HMRC. None of it is exotic, but it's slower and fiddlier, and it's the sort of thing that's far easier to get right with a tax adviser who's seen it before.
One more guardrail: relief can only reduce tax you genuinely owed in the year it's applied. Carry into a year where your liability was already nil and there's nothing for the relief to bite on. It isn't refunded as cash, and it isn't carried on again to a third year. SEIS, EIS and VCT subscriptions also generally require you to be a UK taxpayer to claim in the first place.
Where carry-back sits in the wider process
For the angel, the order of play tends to run: the company secures HMRC advance assurance before the round, you subscribe for shares, the company later issues your SEIS3 or EIS3, and only then do you claim - choosing, at that point, whether to take the relief in the current year or carry it back. Carry-back is the last decision in the chain, not the first, which is exactly why it pays to understand it before the certificate arrives rather than after.
Treat the figures here as the starting map, not the territory. Tax rules shift, personal circumstances vary, and the gov.uk guidance is the primary source - this piece is general editorial information for UK angels, not financial or tax advice. Before you act on any of it, take advice from an FCA-regulated adviser or a qualified tax specialist.
Frequently asked questions
Can you carry back both SEIS and EIS income tax relief?
Yes. Both schemes allow you to treat all or part of an investment as though it were made in the tax year before the one in which the shares were actually issued, and to set the income tax relief against that earlier year. The annual investment limits still apply to the year you carry back into - £200,000 for SEIS and £1,000,000 for EIS (or £2,000,000 where at least £1,000,000 goes to knowledge-intensive companies).
How far back can SEIS or EIS relief be carried?
Only one year. Relief can be carried back to the tax year immediately before the one in which the shares were issued. There is no facility to reach two or more years into the past.
Do I need the SEIS3 or EIS3 certificate before I can carry back relief?
Yes. You cannot claim relief - in the current year or the previous one - until the company has issued you the SEIS3 or EIS3 certificate confirming HMRC has authorised it. The certificate is what lets you claim, and it often arrives months after you have sent the money.
Does carry-back work if I had no income tax to pay in the earlier year?
No. SEIS and EIS income tax relief can only reduce tax you actually owed. If your liability in the earlier year was already nil, there is nothing for the relief to offset, and the relief is not paid out as cash or refunded beyond the tax due.
Can I carry back relief on a return I have already filed?
Often, yes. Where the earlier year's return has been filed, the claim is usually made by amending that return (within the normal amendment window) or, if that window has closed, by writing to HMRC with an overpayment relief claim. The exact route depends on timing, so this is a point to check with an adviser.